The car cost limit is the maximum amount that can be used as the vehicle’s cost base for calculating depreciation claims.
Key Points to Remember
- The car cost limit applies only to the purchase price excluding GST.
- You must exclude GST from the purchase price first before comparing it to the car cost limit.
- The car cost limit itself already excludes GST and is the maximum threshold you can claim depreciation on.
- For the financial year 2024-25, the car cost limit was set as $68,108 excluding GST while for financial year 2025-26 it is $69,674 excluding GST. Car cost limit information HERE
- If the purchase price (excluding GST) exceeds the car cost limit, depreciation must be calculated using the limit as the base.
- If you want to depreciate the full cost (100%) immediately, consider using the instant asset write-off where applicable. Please refer HERE for ATO threshold.
- The car cost depreciation limit is the maximum value that can be assigned to a vehicle for the purpose of a depreciation claim.
Setup in LodgeiT
Select the correct Category and Type of depreciation to apply the car cost limit properly.
Example
If a business purchases a car for $75,000 including GST, then:
- Exclude GST (10% in Australia): $75,000 / 1.10 = $68,181.82 purchase price excluding GST.
- Compare $68,181.82 to the 2025-26 limit of $69,674.
- Since $68,181.82 is less than the limit, depreciation can be calculated on the full $68,181.82.
- If the purchase price excluding GST had been $72,000, depreciation must be calculated using $69,674 as the cost base limit.
ATO related link: